The report from the National Housing Finance and Investment Corporation said the return home combined with the lack of overseas migrants meant Australia was heading towards a housing market shock that would create an oversupply.
It found that the lack of overseas migrants caused by the closed borders would mean that the housing market would be oversupplied in 2021 by 127,000 dwellings and by 68,000 in 2022.
“Some surveys suggest one in six people changed their living arrangements after the onset of COVID-19, such as moving back in with the parents or delaying moving out. As of May, more than 300,000, mostly young, Australians had moved back to their parents’ house,’’ it said.
Longer term, demand should exceed supply by population growth was expected to be “structurally lower’’.
“Despite the impacts of the pandemic, a recovery in construction activity from the COVID-19 recession is underway – led by detached housing – with total net additions expected to rise to 181,000 in 2021 from 170,000 in 2020 on the back of the monetary and Federal and State government fiscal stimulus put in place this year,’’ the report said.
In the Brisbane market, NHFIC also expected supply to exceed demand across 2021 and 2022, but more modestly. Demand and supply are broadly more balanced across the projection period than Sydney and Melbourne.
“The Brisbane market seems relatively resilient compared to Sydney and Melbourne in response to the demand shock, mainly because it is less reliant upon international students in the longer term rental market,’’ the report said.
It said the stimulus measures from governments were short term and over the medium to long term “the lower demand for new housing is expected over the medium to longer term, with net additions likely to fall and then recover to around 148,000 in 2025’’.
Weakness in net apartment additions will potentially extend to 2025, when 27,000 new dwellings are expected, similar to levels seen prior to the apartment boom.
“First home buyers have been taking advantage of the recent easing in dwelling prices, low interest rates and government stimulus, accounting for more than 40 per cent of total new housing loans—10 percentage points higher than the long-term average,’’ the report said.
NHFIC chief executive Nathan Dal Bon said while there had been many challenges during 2020, there had also been a great degree of resilience in the property sector to date.
“COVID-19 has changed the way we live and work with implications for housing demand, supply and affordability across all of Australia’s housing markets,’’ he said.
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